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CETA Implementation in Canada: Bill C-30 Brings Significant Changes to the Canadian Patent System
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Changes are coming swiftly, as the federal government moves to implement the Comprehensive Economic and Trade Agreement (“CETA”) just days after it was signed by Prime Minister Trudeau in Brussels at the end of October 2016.

These changes will significantly impact biologic/pharma patents in two major ways. First, they will implement, for the first time, a Canadianized version of patent-term restoration. Second, they will revamp the current framework for linkage between patents and the approval of biosimilar/generic drugs in Canada by giving innovators the right of appeal, by changing the nature of the PM(NOC) proceedings to a more U.S.-style approach, and by providing for finality in such litigation.

Importantly, amendments to the PM(NOC) Regulations have yet to be published. Bill C-30 proposes changes to the Patent Act that will provide legislative authority for the amendments to come.

Each of these proposed amendments are described in more detail below.

Patent Term Restoration

Bill C-30 seeks to amend the Patent Act to provide for the issuance of Certificates of Supplementary Protection (“CSP”), which will help compensate patentees for the effective loss of patent protection they suffer as they await regulatory approval to market a drug in Canada.

The term of a CSP will be calculated by subtracting five years from the period beginning on the patent’s filing date and ending on the day on which a Notice of Compliance (NOC) is issued, up to a maximum of two years. The practical effect is that patent protection may be extended for up to two years for pharmaceutical patentees. The Minister of Health is granted discretion to reduce the term of a CSP if the Minister is of the opinion that there was unjustified delay on the part of the pharmaceutical company.

Although the government had previously indicated that some degree of patent term restoration would apply retroactively, the legislation is silent on whether a longer patent term will be available for currently marketed patented medicines.

The key requirements for making an application to the Minister of Health for a CSP are:

the patent pertains to a medicinal ingredient, or combination of medicinal ingredients, contained in a drug for which an NOC was issued;

the NOC is the first NOC that has been issued with respect to the medicinal ingredient or the combination of medicinal ingredients;

no other CSPs have been issued with respect to the medicinal ingredient or the combination of medicinal ingredients; and

the application for a NOC was submitted within the prescribed deadline.

The issuance of a CSP will grant many of the same rights and privileges that are granted by a patent:

“The issuance of a certificate of supplementary protection grants the certificate’s holder and their legal representatives, during the certificate’s term, the same rights, privileges and liberties that are granted by the patent set out in the certificate, but only with respect to the making, constructing, using and selling of any drug that contains the medicinal ingredient, or combination of medicinal ingredients, set out in the certificate, by itself or in addition to any other medicinal ingredient.” (section 115(1))

One notable exception is that a CSP will not provide protection to innovators seeking to prevent generic pharmaceutical companies from exporting drugs to the U.S. (and elsewhere).

Rights of Appeal

Subsection 55.2(4)(j) of the Patent Act will allow the Governor-in-Council to make regulations relating to “any appeals” from decisions “respecting the infringement of any patent”. As we have previously explained, innovators currently have no effective right of appeal from unsuccessful PM(NOC) applications because the issuance of a NOC to the generic pharmaceutical company renders the appeal moot.

Section 55.2(4)(c) appears to grant the Federal Court the jurisdiction to suspend or revoke a NOC in order to extend to the Federal Court of Appeal jurisdiction to hear an appeal since the issuance of the NOC would otherwise render the appeal moot. The precise mechanism that grants innovators’ appeal rights will be elucidated in the amendments to the PM(NOC) Regulations to come.

Procedural Changes

Section 55.2(4)(j) grants the Governor-in-Council power to make regulations:

“respecting such proceedings, including the procedure of the court in the matter, the defences that may be pleaded, the remedies that may be sought, the joinder of parties and of rights of action and the consolidation of other proceedings, the decisions and orders the court may make and any appeals from those decisions and orders”.

The anticipated amendments to the PM(NOC) Regulations are not yet known; however, we expect a shift in practice towards U.S.-style Orange Book proceedings which will provide for some form of consolidation or joinder of multiple cases involving the same drug and the same patent, discovery rights for all parties, and a bench trial with live witnesses.

The most important aspect of the procedural changes is addressed in the “summary” of the proposed changes which calls for “the replacement of the current summary proceedings with full actions that will result in final determinations of patent infringement and validity”. It seems likely that the amendments to the PM(NOC) Regulations will prevent subsequent litigation by either the generic or the innovator. This will raise the stakes in the initial proceeding for all involved.

Next Steps

The government has indicated that it will seek to implement CETA and Bill C-30 by the end of 2017. In the coming months we can expect the government to release the proposed regulations for comment. The details will provide us with valuable insight into the potential long-term impact on the pharmaceutical industry in Canada.

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